Hurting For Cash, Online Porn Tries New Tricks

Porn has a distinct problem that less racy media companies don't have: Users are afraid of leaving a digital record. Paid sites are trying to lure viewers out of the shadows and into credit card payments.

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Originally published on February 17, 2014 2:59 pm

I hit the streets of San Francisco to ask strangers their favorite search terms for online pornography. It was not hard to get answers, even on the record.

"Teacher porn, student-teacher fantasy," Jason Ravel says at a coffee shop. "That's who I was around most often in grade school. I was a really good student."

Chanelle Dorton, who's passing by a train station, is into ebony lesbian sex. "I don't like straight porn," she says.

But just about everyone I ask says he or she never, ever pays for it. "Never pay for porn, never pay for sex," Bell says. "I guess I'm a cheapskate when it comes down to it. I download all my music, too."

That is exactly the porn industry's problem, says Internet porn mogul Peter Acworth. Acworth is founder of Kink.com, a San Francisco porn conglomerate that had 205 million page views last year.

"We're suffering what happened to the music industry a while back. It's becoming much more easy to get content for free and people are less apt to want to pay for it," he says.

Online pornography helped build the Internet. It was the cutting edge of e-commerce when sites like Amazon.com were just starting. By some estimates, about one-quarter of all Web searches are for porn, although stats are hard to obtain.

But now, experts say, even though it still has a lot of eyeballs, fewer people are paying to view. To recoup some of those costs, Acworth's porn empire is using data analytics.

The Rise And Fall Of The Industry

Back in the late 1990s, when Acworth was getting his Ph.D. in finance at Columbia University, he realized there was a lot of money to be made in streaming sex online. So he started video shoots right out of his own room.

"You honestly couldn't add the sites fast enough," he says. "It was like money was falling from the sky."

Earnings were so strong that, by 2006, the company made a major real estate investment and purchased the Armory, a towering building that takes up a city block in the Mission District of San Francisco.

But because of piracy and an explosion of free sites, the heyday is over. Global revenue plummeted by 50 percent from 2007 to 2011, the porn industry trade group Free Speech Coalition estimated last year. Kink.com saw a decline in revenue for the first time in 2011.

Porn has a distinct problem that less racy media companies don't have: Users are afraid of leaving a digital record — and not because of the National Security Agency.

"We get, constantly, emails from people's wives because they found a charge on the husband's credit card and they're upset to find out that it's for pornography," Acworth says.

Brand Loyalty And User Privacy

Acworth has come under fire recently by regulators for risky employment practices such as unprotected sex. But his central business concern is viewer loyalty. Kink.com is on a campaign to lure viewers out of the shadows, and into credit card payments, by offering a better product.

Acworth takes me upstairs at Kink headquarters, to the set of a live porn shoot. A model who is performing in front of a webcam says in a sultry tone, "The part of my body that I like the most would probably have to be ..." Her voice tapers off and she shows rather than tells. Paying subscribers are watching and typing in what they'd like her to do next.

Across the Internet, roughly 15 percent of Web pages are porn sites. A lot of the free stuff is poorly made, is low resolution or shows a short clip of a longer video. But Acworth says counterfeiters can't pirate this kind of personal request.

At the other end of the room, there's a community event, where members of Kink.com are dressed in tuxedos and gowns. Acworth is creating a lifestyle brand — a common strategy for media companies that need to build loyalty with fans.

He's also hiring a team of data analysts to make Kink.com like Netflix: Track your every move and — based on what you search and click — push the content you like most right in front of you.

Acworth says no one has to worry about personal data getting sold to outside advertisers. "I shouldn't think anyone would really be interested in that. Who would want to buy data pertaining to whether somebody likes bondage or spanking?"

Andrew Kahl, an analyst with Evidon — a New York-based company that creates privacy tools — studied porn websites and found that nearly 900 million porn site visitors were tracked by hundreds of third-party advertising companies. "It is bigger than a few companies that you might have heard of," he says.

While a buyer for that data does not exist yet to Kahl's knowledge, he gives a hypothetical example: A condom manufacturer could go to a mainstream website and say, "I want to only show condom advertisements to people who have also viewed porn today."

Porn companies are trying these data analytics, Kahl says, to get back on top of e-commerce.